The compliance landscape in the UK is on the cusp of transformation. Having first proposed elevating company governance in 2021 – known as UK SOx – the Financial Reporting Council (FRC) has in 2024 issued an updated Corporate Governance Code, requiring organizations to fortify risk management and internal controls.
UK SOx mirrors its American counterpart by holding senior management responsible for the accuracy and true representation of financial reports to auditors and shareholders. However, the impact will go far beyond reporting, with UK SOx transforming how companies run their finance and accounting functions.
Achieving the required levels of transparency and compliance necessitates a mindset shift from reactive to proactive, automated and seamless. Leveraging the full potential of technologies like Artificial Intelligence (AI) will prove integral to harnessing such approaches.
Promisingly, future-facing CFOs are already taking advantage of this rapidly evolving space to mitigate risk and ensure business resilience. Research from Everest Group, in collaboration with WNS, reveals that 63 percent of CFOs consider leveraging AI a strategic priority. Such leaders are well placed to embark on their UK SOx rollout journeys. Here, we explore how AI-driven action can see these journeys evolve and develop optimally, transforming accounting and finance in the process.
Harnessing AI Insights for Change Management
The first step on the enterprise journey toward AI-driven UK SOx compliance is change management, with new governance requirements demanding a mindset shift not only within the finance function but across the organization. A majority of CFOs are already aware of the need to get this step right, with more than 60 percent believing that having a robust change management practice is extremely important to driving a successful change initiative.
AI’s potential in this space is myriad and wide-ranging, enabling leaders to do everything from conducting risk assessments to designing new financial controls and frameworks based on AI-derived insights. AI-driven platforms, meanwhile, can deliver personalized guidance to employees adjusting to a new landscape.
Unlocking Next-generation Risk Management and Internal Controls
Once these challenges have been met and a new mindset embraced across the enterprise, the full power of AI can be unleashed, fundamentally transforming risk management across the entire value chain.
Data extraction forms another foundation of this transformation. AI and Machine Learning (ML) powered intelligent automation can help companies revolutionize their data extraction processes, facilitating the automated ingestion of structured and unstructured data, along with its intuitive contextualization.
From here, AI can facilitate ongoing governance, offering dynamic real-time data with live detection of potential threats to help pre-empt risk. Meanwhile, touchless processing with built-in system controls and language neutralization can benefit multi-national corporations.
Reporting will also be transformed, with AI enabling the creation of self-regulating accounting systems, including elements like automated summaries of financial data or auto-reconciliation with quality checks. Looking ahead, integrating Generative AI (Gen AI) into risk reporting will provide further advantages, from voice and text-based alerts, enabling quick detection of issues, to voice-based conversational querying.
Intelligent audit analytics applications can further enhance efficiencies, addressing blind spots in data and strengthening compliance. One company that embraced such a platform identified over 800 audit targets for abnormal spend and USD 44,000 worth of duplicate invoices.
Transforming the Finance Function
For CFOs, Chief Risk & Compliance Officers (CRCOs), heads of internal audit, financial controllers and other stakeholders in the finance function, the real-time transparency and oversight that AI-driven platforms enable will prove crucial in the journey to becoming fully compliant with UK SOx. But at the same time, embracing such platforms can also unlock the full power of the finance function.
Research from McKinsey shows that CFOs spend most of their time (38 percent) managing financial risks, with less (29 percent) spent identifying growth opportunities. AI-driven risk management and monitoring, however, can power this shift. Able to focus on growth, AI-augmented CFOs will find themselves empowered to become Chief Future Officers, using their unique position within the enterprise to usher in a new era of innovation and agility.